Kop cap revealed: Liverpool cannot compete with Chelsea or Manchester United due to £20m limit on transfer spend

Liverpool's ability to compete with Chelsea and Manchester clubs United and City in the transfer market appears to have been hindered by a £20million spending cap, which has been locked in place until 2014.

The startling revelation was published in a prospectus back in March by investment banks Rothschild and Merrill Lynch to attract potential investors in the club.

The £20m spending cap, which will also include wage increases accruing from contract renewals, means that Anfield boss Rafa Benitez must continue to sell before he can buy over the next fives years as Liverpool chase their first league title since 1991.

The prospectus, obtained by Bloomberg News, provides a sense of how desperately Liverpool's owners Tom Hicks and George Gillett need new finance and reveals that the Americans were considering increasing the average ticket price by eight per cent to help ease the club's debt.

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The underlying lack of finance for Benitez remains a problem. It might not be as dire a position for the club as suggested by the banner unveiled by Liverpool fans before the Carling Cup tie with Leeds at Elland Road on Tuesday – 'We are the new Leeds,' it read – but Benitez is clearly limited in his options in the transfer market.

The section of the Rothschild/Merrill Lynch document relating to 'player transfer payments' states: 'Management believes that the normalised long-run level of new net player capital expenditure is £20m.

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'The accompanying data suggests 'long run' means the next five years. This figure 'will grow together with increases in media broadcasting revenues,' the bankers promise.

Though revenues from British broadcasters are expected to drop, overseas rights should grow before 2014.

Hicks and Gillett eventually decided against an increase in ticket price, which would have come as the majority of the 20 Premier League clubs decided to freeze or reduce prices of some tickets for this season.

But other details of Hicks and Gillett's future commercial strategy for Liverpool, outlined in the document, include plans to convert 1,000 regular seats at Anfield into corporate seats and the creation of Liverpool-branded academies.

New secondary sponsors will be targeted and catering facilities improved to help realise ambitions to increase commercial revenue from £59m to £111.4m in the next five years – a lofty target.